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For several franchise types, many franchisees start their new business on their own and work it solo or with a partner. As part of building the business, owners put in the initial blood, sweat, and tears that get the operation off the ground and running successfully. It is hard but rewarding work.
Running your franchise on your own, if possible, is financially prudent in the early stages. Employees cost money, after all, and cash shortages due to poor expense management are common reasons for business failure.
Nevertheless, the day will likely come when it is no longer appropriate to run the franchise yourself. It can be difficult to determine when it is wise to take on the expense of an employee, but there are clear signs when it is time to hire your first franchise employee.
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You’re getting complaints. Poor customer service or inability to keep up with promised services will hurt your business. A customer’s input is valuable. Listen to what they say, and decide if an employee could help alleviate the issue. If you can no longer provide good service or keep your website inventory up to date, an employee might be the solution that saves your franchise.
Growth has stagnated. Sometimes, it is wise to keep your business slim, but if you are saying “no” because you cannot take on more work, it is time to hire and train someone who can help scale up your business. Your business forecasts should show significant growth in the first few years. When the growth slows and you are turning away customers, it is time to hire and then continue your growing franchise success.
You can’t work on the franchise. Working in the business is important to developing relationships, but working on the business means looking beyond the day-to-day necessity of fulfilling your product or service. When you don’t have time for bookkeeping, networking, future planning, marketing or other activities that support the franchise, an employee can lighten your load so that you can make the franchise solid and successful.
You forget what a vacation is. Motivated franchisees show admirable work ethics, but everyone needs a break. If you cannot find the time to step back and take a breath, the business will not be as healthy. We need the time for fresh ideas and rest that add to productivity. Vacations are not just rewards—they are important components to keeping a franchise sharp.
You plan to sell. Not everyone plans to stay in the franchise; rather, many plan to build a business and then sell for a profit. Depending on your long-term exit strategy, an employee may make your goals more realistic. If you plan to sell, an employee who can operate the franchise makes the purchase more valuable to a buyer. And that, of course, means a higher purchase price for you.
You’ve earned it. Literally—you have reliable, ongoing revenue streams and can comfortably afford to pay for an employee. Once you do, you will reap the benefits of all your hard work. The business valuation increases, revenue increases, complaints become rare, and you might even get a vacation.
Hiring an employee is one of the most important decisions you will make for your franchise. The decision is a big one with a price tag that must make sense and help you meet your goals. You must be aware of the signs that are pointing to a new employee.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.